Can EOG Resources Grow At 25% With Oil At $65?
Richard Zeits • 42 Comments
Richard Zeits • 42 Comments
Fri, Jul. 15, 3:47 PM
- EOG Resources (EOG -0.6%) is lower after saying it expects a $44.4M non-cash net loss in Q2 on the mark-to-market of its commodity derivative contracts.
- EOG says the net cash paid for settlements of its commodity derivative contracts during Q2 totaled $14.8M.
- EOG says it has not entered into any further crude oil derivative contracts since filing its Form 10Q on May 5 and it has no outstanding crude oil hedges as of July 14; it has not entered into new derivatives contracts for gas since May 5.
Wed, Jul. 13, 2:28 PM
- Lower costs and improved productivity have enabled U.S. shale oil drillers to made major strides in adapting to lower crude prices, energy consultant Wood Mackenzie says.
- Shale drillers have cut the costs of producing new supplies of oil by as much as 40% in the past two years by pushing for lower rates from the companies that provide rigs, pipes and other services.
- Wood Mackenzie estimates that oil companies could make money in west Texas' Bone Spring and Wolfcamp tight oil plays with $37/bbl oil, the Eagle Ford Shale in south Texas could turn a profit at $48/bbl, the average breakeven price in North Dakota’s Bakken Shale is $58/bbl, while breakeven at Oklahoma’s SCOOP region is $35/bbl.
- The report says the big winners will be incumbent operators in the key shale oil patches in the lower 48 U.S. states, such as in the Mid-Continent and Permian Basin, including U.S. independents such as EOG Resources (EOG -1.7%), Pioneer Natural Resources (PXD -2.1%), Continental Resources (CLR -2.1%) and Apache (APA -1.9%), as well as oil giants Exxon Mobil (XOM -0.5%) and Chevron (CVX -0.2%).
Mon, Jun. 20, 7:11 PM
- Eleven of the biggest U.S. oil and gas producers leak so much methane gas into the atmosphere every year that the emissions would be the equivalent of running seven coal-fired power plants for a year, according to a new report from the Center for American Progress.
- Using 2014 data, the report says the top five U.S. methane emitters were ConocoPhillips (NYSE:COP), Exxon Mobil (NYSE:XOM), Chesapeake Energy (NYSE:CHK), EOG Resources (NYSE:EOG) and BP America.
- The Obama administration has announced a goal to lower methane emissions from oil and gas by 40%-45% from 2012 levels by 2025, and the EPA also is preparing standards for methane emissions for current oil and gas wells.
Thu, Jun. 16, 12:19 PM
- North Dakota’s crude oil production fell by the largest amount ever for a single month, sinking 6.3% to 1.04M bbl/day in April from a revised 1.11M bbl/day in March.
- The North Dakota Department of Mineral Resources cites low crude oil prices but also windy weather throughout much of the month, which delays the fracking of wells, adding that it expects the slide to accelerate through May and into the summer.
- There are 28 drilling rigs currently active in the state, up from 27 in May which was the fewest since July 2005; at its peak, North Dakota had 218 rigs drilling in May 2012.
- Companies with a Bakken presence include: CLR, ERF, EOG, HK, HES, MRO, OAS, QEP, SM, STO, TPLM, WLL.
Wed, May 11, 6:48 PM
- The EPA tomorrow will issue the first U.S. standards aimed at curbing methane emissions from the oil and natural gas industry, WSJ reports.
- The rules, which will affect only new oil and natural gas wells, will require companies to install technologies to monitor and limit inadvertent emitting of methane during the production and transmission process of natural gas, and require new practices such as regular inspections for leaks.
- Meanwhile, a new study says the Bakken oil-producing region of North Dakota and Montana leaks 275K tons/year of methane, a sizeable amount but less than previously believed.
- Companies with a Bakken presence include: CLR, ERF, EOG, HK, HES, MRO, OAS, QEP, SM, STO, TPLM, WLL
Fri, May 6, 3:37 PM
- EOG Resources (EOG -2.8%) has the ability to earn "strong returns" with oil prices at $40/bbl and triple-digit returns should prices spike to $60, Chairman/CEO Bill Thomas said during today's earnings conference call.
- EOG's move this year to focus on "premium drilling" - wells that can generate a return of at least 30% after taxes on $40 oil - has significantly improved average well performance, Thomas said, adding that the company has a $15-$20/bbl cost advantage over the rest of the industry, which needs a sustained $60-$65 oil price and 12 months of lead time to deliver modest growth.
- Thomas also said efforts at "enhanced oil recovery," or getting more output from existing wells with relatively low investments, had been successful, particularly in the Eagle Ford shale play in south Texas.
- "Our shift to premium drilling this year is a game changer. We expect well productivity to improve more than 50% in 2016, the CEO said.
- Shares are lower after reporting a Q1 loss that nearly matched estimates alongside a 42% Y/Y drop in revenues.
- Now read EOG Resources cut to Hold from Buy at Deutsche Bank
Thu, May 5, 5:01 PM
Wed, May 4, 5:35 PM
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Sun, May 1, 1:08 PM
- A new study finds that fracking of U.S. shale fields is causing a global surge in ethane emissions. Ethane is known to contribute to global warming and dangerous air pollution.
- Global ethane levels had been falling since the 1980s, but in 2010 a sensor in Europe picked up a surprise increase. U.S. shale fracking was thought to be the culprit. More recently, a single field in the North Dakota and Montana Bakken Formation has been found to be emitting 2% of the worldwide total.
- "Two percent might not sound like a lot, but the emissions we observed in this single region are 10 to 100 times larger than reported in inventories. They directly impact air quality across North America. And they're sufficient to explain much of the global shift in ethane concentrations," said Eric Kort, the first author of the new study published in Geophysical Research Letters.
- Ethane emissions from other U.S. fields, especially the Texas Eagle Ford, likely contributed as well, the research team says. The findings illustrate the key role of shale oil and gas production in rising ethane levels.
- Baaken stocks include: CLR, ERF, EOG, HK, HES, MRO, OAS, QEP, SM, STO, TPLM, WLL
- Eagle Ford stocks include: APC, APA, COG, CRZO, CHK, COP, ECA, XOM, MUR, PXD
- See the full study here »
Wed, Apr. 27, 4:56 PM
Wed, Apr. 20, 2:44 PM
- EOG Resources (EOG +0.8%) is downgraded to Hold from Buy with an $83 price target, trimmed from $85, at Deutsche Bank on valuation.
- The firm says EOG remains a best-in-class operator with leading asset quality, but given significant outperformance, aggressive multiple expansion - 6.2x premium on 2016 EV/DACF vs. the historical peer average multiple - and limited NAV upside in a move to $65/bbl crude, it sees greater potential upside elsewhere in the sector.
- Now read The Doha meeting could work out well for EOG Resources
Mon, Apr. 18, 2:47 PM
- Goldman Sachs expects energy investors will maintain a "buy the dip" mentality, and suggests focusing specifically on its Buy-rated shale productivity favorites such as Hess (HES +4.3%), EOG Resources (EOG +2.2%), Cenovus Energy (CVE +0.3%), PDC Energy (PDCE +4.3%) and Diamondback Energy (FANG +1.7%).
- Even after the Doha collapse, Goldman maintains its forecast for Q4 2016 WTI of $45/bbl and FY 2017 average of $58/bbl, as low near-term oil prices should ultimately enable mechanisms that will bring oil markets into better balance.
- Now read Goldman names nine favorites for Goldilocks ideal $35 oil
Fri, Apr. 15, 6:30 PM
- North Dakota crude oil production fell for the third straight month in February to hit its lowest level in 18 months, while the state's rig count sunk to its lowest since October 2005, according to the latest data from the state's Department of Mineral Resources.
- The U.S.’s second largest oil producing state pumped 1.118M bbl/day in February, down very slightly from January's 1.122M but January output fell 2.6% from December, which fell 2.5% from November.
- The number of rigs drilling for oil in North Dakota is now at 29, down from 52 in January and 40 in February; the all-time high was 218 in May 2012.
- However, natural gas production in the state rose 2.9% in February to 1.69B cf/day, a new all-time high.
- Bakken shale exposure includes: CLR, HES, WLL, STO, OAS, MRO, EOG, XOM, NOG, CHK, DNR, SM, NFX, OXY, MUR, COP, SSN, CXO, EOX
- Now read U.S. oil rig count falls by three in latest Baker Hughes tally
Thu, Apr. 14, 12:58 PM
- Simmons analysts raise EPS estimates and price targets for oil and gas E&P stocks to reflect a mark-to-market update to the forward curve through 2018.
- “Our E&P coverage universe now offers ~13% upside potential on average as upward revisions to our price targets were more than offset by the bounce in equities,” Simmons says.
- The firm's top large-cap E&P stocks: Apache (APA +0.2%), Concho Resources (CXO -0.3%), EOG Resources (EOG -0.1%), Noble Energy (NBL -0.7%), Pioneer Natural Resources (PXD +0.8%).
- Favorite small- to mid-cap names: Diamondback Energy (FANG -0.7%), Newfield Exploration (NFX -0.3%), Parsley Energy (PE -0.4%).
- Simmons' top natural gas pick: Gulfport Energy (GPOR -1.5%).
- Now read Apache: Turnaround and future growth
Thu, Apr. 7, 2:26 PM
- Goldman Sachs says crude oil at $35/bbl is the Goldilocks ideal - priced neither too high nor too low but just right - to make shares of U.S. explorers worth buying, suggesting investors and use volatility to add to positions of shale productivity winners.
- The $30-$35 range should keep behavior of U.S. oil producers unchanged and accommodate $55-$60 oil in 2017, Goldman says, providing opportunity for equities, while a near-term rally to $45-$50 oil would reduce 2017 upside but still be favorable for equities, at least temporarily.
- Goldman says it favors "secular productivity winners" EOG Resources (EOG -0.6%), Diamondback Energy (FANG +1.3%) and PDC Energy (PDCE -4.4%), as well as stocks in “the next rung down,” including Hess (HES -3.5%), Cenovus Energy (CVE -1.8%), Anadarko Petroleum (APC -1.1%), Encana (ECA -4%), Continental Resources (CLR -2.1%) and Whiting Petroleum (WLL -0.6%).
- Now read Oil, interest rates and game theory: Why prices have further to fall
Wed, Apr. 6, 2:46 PM
- Stifel analysts downgrade Anadarko Petroleum (APC +2.9%), Continental Resources (CLR +2.5%), EOG Resources (EOG +0.2%), Matador Resources (MTDR +4.1%) and SM Energy (SM +5.1%) to Hold from Buy, saying the stocks are too risky ahead of OPEC's April 17 meeting.
- The firm says mixed signals from OPEC ministers, ramping volumes from Iran, and potential backlash from Saudi Arabia heightens oil price risk, causing it to become more defensive with its energy recommendations.
- Stifel believes the five stocks are either underhedged on their production or outspending current 2016 cash flow.
- Now read Merrill Lynch on Oil: The bottom is in
EOG Resources, Inc. engages in the exploration, development, production and marketing of crude oil and natural gas primarily in major producing basins in the United States, Canada, Trinidad & Tobago, the United Kingdom, Argentina and China. Its operations are all crude oil and natural gas... More
Sector: Basic Materials
Industry: Independent Oil & Gas
Country: United States
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